In its latest Quarterly Prediction report, the New Zealand Institute for Economic Research (NZIER) stated that it expects the economy to grow slowly over the next year, though it will remain weak over coming years.

The NZIER expects annual growth to have contracted by 1.5 per cent in the year to March 2009, making the recession more severe that the one which took place in 1998.

Annual average growth in real GDP is expected to stand at -1.5 per cent over the same period, the lowest since the end of 1991, die to falls in private consumption, investment and net exports.

However, it is believed that signs of an upturn could be seen by March 2010, at which point it is hoped that GDP growth will have increased to +1.1 per cent. By 2012, this figure is set to increase to a healthy 3 per cent.

“Over the next year, the combination of lower interest rates than in 2008, lower petrol prices, still relatively high wage inflation, further tax cuts in April 2009 and growing immigration will stimulate a modest increase in private consumption,” the report stated.

However, before signs of economic stability are seen, further jobs are set to be lost. It is predicted that 6 per cent of the country’s workforce will be out for work by March next year, and that this figure could remain until 2012.

“Firms may have to shed labour as they did in the 1991 recession, when unemployment reached 10.9%,” the statement read.

However, it is believed to be unlikely that the rate of unemployment will reach double figures, as the current recession is not deemed to be as deep or as long.